Trump farm tariffs tank in Iowa ~ echo opinion

Trump's farm (unwanted!) bailout is not what Iowa farmers want: Editorial published in the newspaper, the Des Moines Register

See if this makes sense to you: Donald Trump starts a trade war with China. When American farmers complain, he decides to pay them off with $12 billion. Meanwhile, he continues to borrow money from China to keep the government running.

It’s just one of the absurdities sprinkled like soy nuts on top of the half-baked corn muffin of Trump’s scheme to reverse trade deficits while driving up the federal deficit and debt.

Here’s what we’re talking about at the Des Moines Register:

Trump thinks China is ripping off the United States by using protectionist trade practices that put American businesses at a disadvantage. So he unilaterally imposes tariffs on steel and aluminum and other foreign goods, launching a trade war of retaliatory tariffs, including on soybeans, pork and other agricultural goods, produced in Iowa.

Farmers, who stand to lose billions of dollars in exports, complain, so Trump proposes up to $12 billion in direct payments and other aid for agriculture. This isn’t tax money — it comes from fees paid on imports from places like, well, China. But it’s money going out while the federal budget is projected to run up a trillion-dollar deficit by 2020.
China remains the United States’ largest foreign lender, with about $1.2 trillion of our debt as of October 2017, according to Bloomberg News.

Japan and Brazil are next in line. Brazil, by the way, is a major competitor in the soybean export business, and it stands to gobble up market share from Iowa and other major exporters.

It isn’t any wonder that some prominent conservatives, including the Koch brothers, and budget hawks like Sen. Rand Paul are lambasting the move as “welfare” for farmers.

"Tariffs are taxes that punish American consumers and producers," Paul wrote on Twitter. "If tariffs punish farmers, the answer is not welfare for farmers — the answer is remove the tariffs."

Most of Iowa’s Republican congressional delegation seems to agree that the farm aid package is a Band-Aid that wouldn’t be necessary if Trump would just agree to refrain from the unnecessary limb amputation. But they are still willing to take the Band-Aid.

Sen. Joni Ernst put it this way: “In Iowa alone, more than 456,000 jobs are supported by global trade, and these new tariffs are threatening $977 million in state exports. While a trade mitigation package could boost farmer morale in the short term, this is ultimately a short-term fix. We need a longer-term strategy to ensure that farmers are able to sell their goods around the globe.”

Rep. David Young was more skeptical of the aid package, however. "What this really is, though, is the administration — the president — admitting that his trade policies are hurting Iowa farmers and producers, and all across the heartland for that matter," Young said in an interview with WHO-TV. "Farmers want markets, they want trade, and not necessarily this aid."

The timing of Trump’s aid package is highly suspicious. 

As the Register, the Washington Post and other media have reported, most soybean farmers are doing fine right now because most of their crop was sold in advance at higher prices than today’s market rate. That may not be the case with all other producers and manufacturers, but the real concern seems to be about what might happen if this trade war drags into next year.

The apparent goal of Trump’s farm giveaway and the way it is most likely to be effective is as a $12 billion mute button for the legitimate concerns of farmers, agribusinesses and officials in rural, GOP-friendly states. And right before the midterm elections, too. Does this plan make sense now?

This editorial is the opinion of the Des Moines Register’s editorial board: Carol Hunter, executive editor; Kathie Obradovich, opinion editor; Andie Dominick, editorial writer, and Richard Doak and Rox Laird, editorial board members.

Echo on collateral damage caused by trade wars

Opinion echo: An intellectually persuasive argument in opposition to Trump's trade wars, by George Will and published in Rapid City Journal, a South Dakota newspaper. 

If you are not collateral damage in the escalating trade wars, the bulletins from the wars' multiplying fronts are hilarious reading. 

(MaineWriter ~ Dear Mr. Will, eventually all Americans will be the collateral damage caused by Donald Trump's horrible leadership and the trade wars.)

Columnist George Will ~ People who think trade wars will somehow produce prosperity are not open to evidence based economics.  It's like saying every place is within walking distance, if people have enough time to walk there.

You are collateral damage only if you are a manufacturer, farmer or consumer, so relax and enjoy the following reports.

Whirlpool, which makes washing machines and demands for government protection, wheedled Washington into imposing tariffs on, and quotas for, imported machines. 

Unfortunately for Whirlpool, American steel and aluminum makers horned in on the protectionist fun, getting tariffs — taxes paid by Americans — imposed on imports of those materials that, The Wall Street Journal says, account for most of the weight of 200-pound washing machines. And for part of the decline in Whirlpool's share price. And for declining demand for appliances, the prices of which have risen as protectionism increases manufacturing costs and decreases competition.

Citing the threat to America's "national security" (oh paaaaeeeeze!) from American consumers (they caused 2017's imports of $192 billion worth of cars, 44 percent of all cars sold in America), the administration contemplates imposing tariffs on cars. 

USA Today estimates that the tariffs would add $4,000 to $5,000 (approximately the size of this year's tax cut on $125,000 in income) to the price of a car (average price: about $32,000). U.S. auto manufacturers oppose the tariffs, which would also cover vehicle components, $147 billion of which ($100 billion more than steel and aluminum imports combined) were imported last year for cars made in America by Americans and sold mostly to Americans.

General Motors' supply chain includes 20,000 businesses worldwide. Of the seven "most American" car models, measured by the value of domestically made components, four are Hondas, three models made in Alabama and one made in Ohio. The number of 2018 models whose parts are all American or Canadian: 0.

However, the hundreds of thousands of Americans employed by Japanese automakers have less to fear than other American autoworkers do from the American government's fears about American consumers' threat to America's security. China, retaliating against new U.S. tariffs on Chinese products, has raised to 40 percent the tariffs on imports of American-made autos. These include BMWs (87,600 of the 385,900 made in South Carolina in 2017 were exported to China) and Mercedes (The Wall Street Journal reports that two-thirds of the approximately 300,000 vehicles made in Alabama are exported worldwide). The New York Times reports that BMW has stopped exporting the X3 crossover from South Carolina to China, shifting production of it to plants in China and South Africa.

Volvo, formerly Swedish but now Chinese-owned, just opened a $1.1 billion South Carolina plant that currently employs 1,200. Volvo has planned to increase employment to 4,000, with half the workers building cars for export, especially to the world's largest auto market, China. (In 2018's second quarter, GM sold 758,000 vehicles in America, 858,344 in China.) So, under current policies, China will impose a 40 percent tax on imports made by a Chinese-owned company.

Last year, soybeans were $12.4 billion of America's $19.6 billion in agricultural exports to China, which might impose a 25 percent tariff on soybeans. The Wall Street Journal reports that University of Illinois and Ohio State University researchers estimate that over four years this "would result in an average 87 percent decline in income for a midsize Illinois grain farm."

The caroms* (MaineWriter ~ a billiard term)  of trade aggressions and retaliations call to mind an experience Gulliver had when his travels took him to the grand academy of Lagado. There he met a man who had worked "eight years upon a project for extracting sunbeams out of cucumbers, which were to be put in phials hermetically sealed, and let out to warm the air in raw inclement summers." To those who say that this is as plausible as trying to produce prosperity with protectionism today's trade warriors respond: Have patience. Given sufficient time, protectionism will pay.

But as the comedian Steven Wright says, everywhere is walking distance if you have the time. Speaking of time:

In the 1830s, a Baptist preacher predicted Jesus would return to Earth sometime between March 21, 1843, and March 21, 1844. When the world persisted, its end was re-predicted by the preacher's followers for Oct. 22, 1844. Between March and October, the number of believers increased substantially. Despite their great disappointment on Oct. 23, many followers held to their beliefs and went on to found the Seventh-day Adventist Church. The lesson from this story, as from the protectionists' sunbeams-from-cucumbers economics, is familiar: The persuasive power of evidence is overrated.

*caroms ~ In billiards, in which the cue ball strikes each of two object balls,